Can blockchain games really offer a sustainable income?
Blockchain games are mostly played for entertainment, but some developers in the industry believe the games could eventually evolve into a form of employment where players can earn a living wage.
Video games using blockchain technology allow players to earn native crypto or non-fungible tokens (NFT) by playing and participating in activities in the virtual world. Users can then trade or sell their rewards to others and convert them to fiat currency or other crypto, such as Bitcoin (BTC) and Ether (ETH).
These game mechanics, known as GameFi and play-to-earn (P2E), have seen some places, like a small community in the Philippines, turn playing blockchain games into a job; However, it is unclear how existing worker protections and labor laws will apply.
Many countries have laws that entitle employees to certain rights, such as a minimum wage, a safe workplace, compensation, a pension fund and other protections.
A completely new unregulated border
Gip Cutrino, a founder and CEO of Web3 platform Runiverse, told Cointelegraph that the concept of using blockchain games to make a living has already had an impact, especially in lower-wage countries.
According to Cutrino, due to the relatively new technology, the laws surrounding the concept have yet to be made clear, but he expects regulations to be on the horizon as more mainstream audiences join the space.
“We are building products and creating solutions that are not taken into account by existing laws, which can become especially complicated when we consider the global and connected nature of blockchain games spread across different countries and legal jurisdictions,” said Cutrino.
“There are no global labor laws that address this specific situation, but we can expect increased regulation as GameFi continues to evolve,” he added.
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He notes that from his perspective, there is more concern around blockchain gaming and the implications of revenue legislation, particularly how regulators may decide to define this revenue category for players.
“Some countries have started drafting laws that would classify any token invested with an expectation of profit and any project that stimulates liquidity pools as securities,” Cutrino said.
The United States Securities and Exchange Commission has sent shockwaves through the crypto space with several enforcement actions against crypto projects and companies over the past few years, claiming in many cases that the tokens used are unregistered securities.
Arguably the most infamous case has been the SEC’s long legal war of attrition with Ripple over the XRP token.
However, Cutrino still believes that blockchain games will have a role to play somewhere in helping people find work.
“The potential for genuine, impactful employment opportunities in GameFi is enormous and only poised to grow from here,” Cutrino said.
“The real value in terms of employment opportunities in the GameFi space is heavily dependent on the tokenomics and circulation for it to generate revenue streams that replace traditional wages while ensuring the sustainability of the game’s growth.”
The industry still has a long way to go
Speaking to Cointelegraph, Adam Bendjemil, head of business development at BNB Smart Chain, believes that using blockchain games to earn a salary can be a viable option and business model, provided demand meets supply and workers are well protected.
“If workers are well protected, there shouldn’t be too many problems for most countries; earning by playing games full-time is already a job for professional players, Bendjemil said.
“Game farmers who spend time playing to sell back precious items are also very common, but not legal – real ownership through Web3 games will turn it into a viable legal job,” Bendjemil added.
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Esports, or electronic sports, is a form of organized competition via video games, with some professional players earning millions in prize money.
According to data collection platform Statista, The International, an annual Defense of the Ancients (Dota 2) esports tournament, offered just under $19 million in prize money last year, but in previous years it has offered far more, tipping $40 million in 2021. .
Bendjemil said that while he hopes and anticipates that making a living playing Web3 games will become a viable option at some point, he doesn’t think it’s possible to make a living at the moment.
He believes that for it to be viable, it will require a well-designed token economy that can adapt to market conditions and the number of regular players, which he says is a significant pitfall to overcome.
In his opinion, fixing these two problems could help avoid the “brutal pump-and-dumps we’ve witnessed in the past.”
“The key aspect of a viable Web3 game economy is likely to be ownership, and the key component of a viable economy is likely to be when people playing long hours to farm precious items will sell it to other players willing to pay for it.”, said Bendjemil.
Ultimately, Bendjemil said video games are meant to be fun, and ownership for players is the primary added value of Web3 games rather than earning a salary.
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“It’s likely to evolve a lot before we reach a viable, long-term job opportunity,” he said.
“Many Web2 games have been successful in establishing a sustainable in-game economy in the past, and I believe that we will see similar viable models emerge in the near future for Web3,” added Bendjemil.
Still too early to know
Karl Blomsterwall, CEO of Nibiru Software – the Web3 developer behind the strategy game Planet IX – shared similar sentiments that it was early days for blockchain games and where they stand legally.
Blomsterwall told Cointelegraph that the Web3 gaming space is still very much in its infancy, making a distinction between play and work difficult to define.
“As adoption increases, and especially if or when users prioritize GameFi over traditional labor, the regulations will be adapted to include GameFi and play-to-earn,” he said.
“This is especially true for free-to-play models where users don’t need a significant buy-in to start playing the game.”
Blomsterwall said that blockchain games are already starting to evolve past the initial stages into something that could be more sustainable as a job opportunity.
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However, he noted that this is like anything in the world: The first wave of something new rarely breaks the mold and succeeds. But the industry still has a way to go both in terms of regulation and development.
“You need first-movers, then the key for projects that come after is to learn from past experiences,” he said.
“GameFi and its value in terms of potential employment may be a contentious topic at the moment, but to think that it’s not going to evolve and become a very relevant work tool almost feels like agreeing with the skeptics when Amazon first launched their e-book store .”